Has India's standard of living really improved?
In this issue:
» Pimco's Gross forced to apologise
» Asia is one of top regions for infra investments
» Will Eurozone's 'comprehensive strategy' work?
» Boosting farm output the only solution to inflation
» ...and more!
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But while the accolades are plenty, one cannot ignore the brickbats either. And these in recent times have taken the ugly shape of high inflation and mounting corruption. Moreover, questions persist as to whether the government will be able to transform the lives of millions of poor in the country. With no long term reforms in place, large sections of the Indian population continue to be hampered by rising prices and erosion in purchasing power. The UPA government came to power with reforms being its main agenda and resulting scams and scandals have tied its hands as a result of which it has been busy trying to tidy up its own affairs rather than focus on developmental activities. Recent attempts to define the poverty line have only been met with rising criticism and have highlighted the government's inability to grasp the ground reality. Indeed, GDP growth in the long term is quite meaningless if it does not improve the standard of living of its citizens and instead increases income inequality.
The latter especially is dangerous and could lead to more insurgencies or revolutions of the kind that were witnessed in the Arab world. Of course, all is not bleak and India's growth rates are still much better than that of the developed world which is grappling with prolonged recession. Moreover, some of India's current problems have been there in the past as well and the Indian economy has been able to grow at a fast rate inspite of it. However, times are changing, intolerance among citizens has increased and the government has to step up its pace on the structural reform front in a bid to diminish the income equality divide.
Do you think that India's high GDP growth has improved the standard of living of its citizens? Share your views with us or you can also comment on our Facebook page.
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Data Source: SIAM
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And now, Gross is being painted as a villain by economists who believe that printing one's way to glory is the only viable solution for kick starting economic growth. We do not agree. We are of the view that the key to long term economic growth is investment that is a result of higher savings and not printing of money. And it is only when the malinvestments of yesteryears are cleared out of the system will the platform for a sustainable growth be laid. Thus, while Gross may be a bit early in his assessment, he is certainly on the right path as far as we are concerned. The next few months will certainly show who gets to laugh the last.
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It's little wonder then that Asia appears as one of the top destinations for infrastructure investments. This is because of the rapid pace of development and the need for infra investments in its emerging economies. India is one of the preferred destinations for fund managers to invest capital. According to research firm Preqin which tracks private equity investments, there are currently 38 unlisted infrastructure funds which have a preference for investing in India. Out of these, 25 have already raised US$ 9.5 bn and another 13 are currently in the market, seeking an additional US$ 7.3 bn. Plus, nine more India focused infra funds are expected to be launched by unlisted fund managers in 2011. Well, we hope that this money at least rebuilds some of our creaky infra, and helps develop greenfield projects.
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Food has remained costly despite good rainfall over the past two years. The inflationary crisis in India has still shown no signs of abating. This is despite 12 rate hikes over a period of 18 months. The cumulative 5% increase in policy rates over this period is the fastest pace of tightening since the RBI was established. And still, inflation remains stubbornly above 9%. Well, we believe that not just focusing on boosting farm output, but also improving the food distribution system is the key to cooling prices. Thus, it may be time for the RBI to stop, and the government to take the reins.
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12 Responses to "Has India's standard of living really improved?"
R.Ramaswamy
Oct 18, 2011Yes for politicians,CEO of Business
No for Poor to upper middle class people.
Laxman Suvarna
Oct 18, 2011In one word 'NO'. The quality of the statistics is suspect, and all projections based on these obviously does not give the accurate picture. To cite an example, what you make of the recent statement of RBI saying something like their inward receipt records does not tally with the exporters figures!